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redtiger

Decline in Central Appalachia

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Its really sad that this is happening, since we all see it first hand. But thats going to happen when the majority of this area was built and expanded on by the coal industry. When the coal jobs leave, it leaves the majority of families high and dry. Thereare very few good jobs around here, its getting to be like it was back when my grandpa had to leave here back in the day to find work. Its just making a bad situation worse.

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Readin', Writin' and Route 23.  The Dwight Yoakum song is still applicable.  Sadly, those that exploited the resources and the people have already moved on, and we are on our own.

 

Don't let the slogans fool you.  We are not affected equally by coal's down turn.  The companies are diversifying and moving into other areas (fracking for gas.) and will leave us in the lurch.

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This region needs to diversify but as and continues to refuse to do so. "Green energy" materials have to be produced somewhere, why not here?  Solar and wind energy would be perfectly suited for reclaimed strip jobs, but thats not happening. The firearms manufacturers up North are having issues in Left states and need somewhere to move to, why not here?  I would like to see those type of jobs moved into this area. Combine that with tourism and I think this region could be sustained. Sadly I dont think its going to happen. 

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http://www.stltoday.com/business/local/coal-companies-having-tough-year-so-far/article_8529f5f6-ec6f-5bc9-aaea-027fb7c4e4e2.html

 

It was supposed to be a better year for U.S. coal producers.

 

But railroad congestion, a mild summer and indications that coal prices have yet to hit bottom have all conspired against the fuel, while cheap and plentiful natural gas continues to put pressure on the industry in the U.S.

 

U.S. coal producers have seen their share prices hit especially hard in the last several months. Though environmental rules are making new coal plants prohibitively expensive and leading to the closure of some older plants, it’s really market conditions — oversupply and the advent of cheap natural gas — that are hitting coal miners hardest, said Ken Colburn, a senior associate at the Regulatory Assistance Project who specializes in air regulations.

 

“I don’t think this is an easy cakewalk necessarily, but nothing the (Environmental Protection Agency) does will lead to the kind of impact on coal as a fuel that the market is having,â€

 

Colburn said. “I think the EPA is probably enjoying a scenario where the market is doing a lot of its work for it in terms of its concerns about coal-based emissions.â€

 

Influential investment bank Goldman Sachs released a report last week predicting a fall of thermal coal prices. The bank also wasn’t optimistic that long depressed prices for metallurgical coal, used in steelmaking, would improve.

 

“They typically derive most of their profits from metallurgical coal,†said Kirk McDonald, an analyst with Clayton-based Argent Capital Management who follows materials and energy. “Especially with what is happening in China, domestically there, they’re producing less steel now.â€

 

The Goldman report highlighted the continued concerns about the industry, said Kristoffer Inton, an analyst with Morningstar.

 

GREAT EXPECTATIONS

 

Early this year, conventional wisdom said the industry would see a reprieve due to an exceptionally cold winter that led to more coal and electricity usage, drawing down utility stockpiles. Instead, it was so cold that some railroads were damaged, compounding the already strained network that now carries fuels competing with coal: shale oil and gas.

 

The mild summer let natural gas producers replenish supplies, while utilities eschewed coal because of rail delivery problems, Inton said.

 

Then China announced last week that it would ban imports of dirty coal, putting further pressure on the global coal market. While some reports suggest it won’t affect Chinese power plants and that many imports already met the standards, markets punished coal stocks nonetheless.

 

“It’s been a string of bad luck,†he said. “You add up all these factors, and it’s just been a difficult year for the coal guys so far.â€

 

The Stowe Global Coal Index of coal and coal-related stocks has declined 12.7 percent this year, with most of that lost coming over the past month.

 

Creve Coeur-based Arch Coal’s share price is down 31 percent over the last month.

 

The negative sentiment also has hit the company’s debt. On Thursday, the price of Arch Coal’s 7 percent bonds that mature in 2019 tumbled to 53.75 cents on the dollar, its lowest price ever, according to Bloomberg News.

 

Newly public Foresight Energy, which focuses on Illinois Basin coal and is headquartered in St. Louis, closed on Thursday at $17.37, down 13 percent from its June initial public offering price of $20 and its lowest price since going public.

 

As of Thursday, shares of the world’s largest private coal producer, St. Louis-based Peabody Energy, had fallen 22 percent in a month. That followed its removal from the Standard & Poor’s 500 index of large companies and a downgrade to “sell†from Goldman this month.

 

Peabody emphasized its high-quality Australian reserves will still be able to compete in China despite the country’s ban of the dirtiest coal varieties.

 

It says metallurgical coal supplies should fall after coal companies collectively announced reductions of 25 million to 30 million tons this year, which represents 10 percent of the seaborne supply. Domestically, Peabody is inking contracts for its western coal at “materially higher levels than published indices,†according to a market commentary it released last week.

 

“Coal, like any bulk commodity, is a classically cyclical industry, and we’re now a couple years into a tough part of the cycle where supply has been plentiful,†Peabody spokesman Vic Svec said. “The good news is that demand remains strong globally.â€

 

The company released a bit of good news that investors seemed to cheer Tuesday, announcing it was raising its outlook for earnings before interest taxes, depreciation and amortization in the third quarter to $190 million to $210 million, above its previous range of $150 million to $200 million.

 

“Our operations are performing well as we experienced higher-than-expected results from the Western United States, improved performance from Australian metallurgical coal mines and continued cost reductions across the platform,†Peabody CEO Greg Boyce said in a statement.

 

TRANSPORTATION ISSUES

 

Railroad transportation continues to be a challenge, said Svec, though conditions are improving.

 

That has slowed the market’s recovery. Utilities are at a nine-year low of coal reserves from the cleaner-burning Powder River Basin, he said, but rail issues make them hesitant to buy more.

 

“While utilities are relatively low on supplies they’re not bidding into a market for coal they can’t get delivered,†he said.

 

Utilities should have to replenish some of their coal, but the fuel will continue to compete with new commodities like shale oil and gas for room on the rails.

 

The railroads are making investments to fix capacity constraints, and Peabody expects “continued demand growth in the United States and globally,†Svec said.

 

The U.S. Energy Information Administration, on the other hand, predicts coal consumption will fall 2.6 percent next year.

 

Meanwhile, China is finishing a rail network that will allow it to use its own coal reserves. That, and any moves that curb imports, could lead to “a domino effect†in the seaborne markets, Morningstar’s Inton said.

 

Australia and Indonesian coal producers will pivot to India and South Africa, and their suppliers will pivot elsewhere in the global seaborne market. That could hurt U.S. producers like Arch, which hopes to nearly triple its exports to 30 million tons by 2020, according to an investor presentation.

 

“Ultimately, U.S. coal, which was really a swing supplier anyway, is most likely to be forced out of the seaborne market,†Inton said.

 

Arch, however, said most of China’s coal imports already meet the quality guidelines it announced last week. Reuters reported last week that power plants may also be exempted.

 

“Europe and the Americas, as well as Japan and South Korea, are more natural markets for U.S. thermal coals, but actions taken by China can have impacts on the seaborne marketplace,†Arch Coal spokeswoman Logan Bonacorsi said.

 

Peabody, with its Australia reserves, may be able to use India to cushion slowing Chinese demand, Inton said.

 

Peabody’s Svec said India’s power plants are along the coast, where they’re easily supplied, and the country’s new prime minister has pledged to improve electric reliability.

 

“Their utilities are at critically low supplies of coal,†Svec said. “We would expect India to be perhaps the fastest coal-importing nation over the next several years.â€

 

Jacob Barker is a business reporter at the Post-Dispatch. Follow him on Twitter @jacobbarker and the Business section @postdispatchbiz.

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This region needs to diversify but as and continues to refuse to do so. "Green energy" materials have to be produced somewhere, why not here?  Solar and wind energy would be perfectly suited for reclaimed strip jobs, but thats not happening. The firearms manufacturers up North are having issues in Left states and need somewhere to move to, why not here?  I would like to see those type of jobs moved into this area. Combine that with tourism and I think this region could be sustained. Sadly I dont think its going to happen. 

 

I hope we stay far away from the "green" madness of solar and wind energy.  Don't help the money hungry global warming alarmists.

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For me its not a global warming as much as its a realist approach. Fossil Fuels are limited and are going to run out, why not be a step ahead of whats coming? For once this area could be on the cutting edge.

 

What are the alternatives? 

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I hope we stay far away from the "green" madness of solar and wind energy.  Don't help the money hungry global warming alarmists.

Are those "money hungry global warming alarmists" willing and able to pay decent wages to the people of central Appalachia? If so, then what's the harm?

 

Also, this a question directed to everyone, because I don't know. Is there natural gas available in Appalachia to mine via hydraulic fracturing? I think they mine for it in western Pennsylvania and northern WV, but I didn't know about southern WV, swva, or eastern KY.

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I dont think the deposits are this far South. Were using terms like mining and deposits but I dont think those are the right terms for gas. Idk what else to use though.

 

Gas is a short term solution anyway, jobs are plentiful while wells are being drilled but once they are the jobs are relatively few. Basically well site upkeep. Dakota will see sustained long term growth but that has more to do with no one being there before the gas boon.

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Fracking is worse on the environment than valley fill, mountaintop removal mining.  The "greenies" just haven't jumped on that one yet. 

 

I wonder how many contaminated water supplies it will take before the put an end to fracking...

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That is true to an extent GMan but Solar and Wind energy is something and will be around much longer than gas.

 

btw I am completely against fracking.

Just don't see solar or wind manuf. coming to Appalachian, our voting base is small and conservative, those job being created by the

more liberal will be and are being used to build their base. Kinda like taking the jobs from one to give to other.

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There was some talk of wind turbines being put up locally. I think some are gonna be built, some arent. There was some  public outrage over them, espicially the ones that were gonna go up on Black Mountain above Appalachia, I think the main argument was they are ugly, apparently people havent been up to the strip job up there

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I work for a company in Bristol that makes custom electro-mechanical equipment for mining companies (transformers, substations, switchgear, etc.) and our biggest customer, the one the company was really built on, is the coal mining industry. However, this past year there's been some pretty huge changes with the decline in coal and we've actually taken on a huge job for a fracking company. I don't know where they do their fracking, but it's given us a lot of needed business, though I have mixed feelings about it since I'm against fracking. I also don't know how long it'll last since so many want fracking to end and as redtiger mentioned, jobs might decline in that industry when the wells are dug.

On the other hand, my company is currently sending me to Virginia Highlands Community College to take their electrical program and one of my teachers is the head of the solar program. From what I've seen and heard, solar is getting huge at VHCC and other places and they are pushing hard to bring more of it to this area. My teacher even told me he had a great deal to give John Battle a solar set up for really cheap, but the WC school board turned it down, saying they like coal better. Coal can keep us going for a while and natural gas can help, but these green energy industries really need to be pushed in this area. There could be lots of manufacturing jobs set up to build solar and wind equipment and businesses hiring people to install them. School districts are even being pushed to include more incentives for green energy programs (my teacher has gotten the technical school in Smyth Co. to set up a program where students can get nearly a quarter of their electrical degree through VHCC done in high school and is pushing to get the same done in Wash. Co. and Bristol....though they're more reluctant for whatever reasons).

Wind and especially solar can bring in lots of jobs from research to assembly to installation to servicing on both large and small scale in this area and if we really pushed it, we could lead the nation easily I believe. My company tried dabbling a bit in assembling wind energy equipment before and I hope they try it again and try to do a little more. Sorry for the long post, but since working for this company and going back to school, I've become very interested in this topic.

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The current administrating in D.C. has basically stated that one of its goals is to end the coal industry.  When I had my new well dug, it had to be fracked to get through the rock to the water.  Done correctly, fracking can be a benefit.  The Dakotas are certainly benefitting from those efforts.

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http://www.foxnews.com/us/2014/10/15/losing-war-on-coal-one-virginia-town-painful-decline/   Losing the War on Coal: One Virginia town's painful decline

By Johnny Giles

Published October 15, 2014
 
coalpic1.jpg?ve=1&tl=1

Appalachia, Va., boasts that it was "built from coal," but now its lifeblood has run dry. (FoxNews.com)

APPALACHIA, Va. –  Roger Whited doesn’t have to think back too far to remember when Main Street was alive with bustling shops and offices, teeming sidewalks and even traffic jams, all thanks to the industry that was the lifeblood of this tiny mountain town and countless others like it.

But six years into what many term the Obama administration’s “War on Coal,†Appalachia’s main thoroughfare is a tableau of boarded-up buildings, empty storefronts and dilapidated homes. Those who still mill about on streetcorners are looking for jobs, not places to spend their paychecks.

"I remember when the downtown area was more vibrant -- streets were packed and businesses were open,†said Whited, who teaches high school social studies in Wise County. “There was the hotel and Bessie's Diner, which was a popular place to get a meal. There were several other restaurants, but now the only place that serves food is a gas station.â€

 

 

For generations, coal powered not only Appalachia’s homes and the lights on Main Street, but also the local economy. The salaries paid by companies like Cumberland River Coal Co. were enough to afford the trappings of a middle class, if hard-won, lifestyle. Men and women who toiled in the mines spent their money downtown and sent their kids to the local schools.

But the Obama administration’s tough regulations on coal-fired electric plants, combined with other market forces, have left the future of coal – and the people, companies and towns that depend on it – in doubt. The administration is seeking to reduce carbon emissions at coal-fired plants by 30 percent by 2030, a goal that industry officials call unrealistic. New plants are too expensive to build, and older ones are too costly to retrofit, they say.

Related Image

The United Mine Worker's union local, like so many shops on Main Street, sits empty. (FoxNews.com)

"If somebody wants to build a coal-powered plant, they can,†President Obama said in January 2009, shortly after taking office. “It's just that it will bankrupt them because they're going to be charged a huge sum for all that greenhouse gas that's being emitted.â€

Even as the nation endured a recession, followed by years of sluggish economic growth, coal towns like Appalachia reeled from policies dictated in Washington. As coal-fired plants closed, demand for coal plummeted. In 2011, Appalachia’s lone high school closed, a casualty of low enrollment.

In July, Arch Coal, parent company of Cumberland River Coal Co., announced plans to idle its mine in Appalachia and lay off 213 workers, a devastating final blow to the town of 1,800. That followed a similar move by A&G Coal Co., once one of the region’s biggest employers.

Related Image

The mines around Appalachia once shipped thousands of tons to coal-fired electric plants, but policy changes in Washington have left the facilities empty. (FoxNews.com)

Miners who hung onto their jobs know their paychecks are numbered.

“You wake up every day wondering if you’ll have a job the next day,†Brandon Lawson, of nearby Big Stone Gap and a miner for six years, told the Bristol Herald Courier. “I’ve seen it [the decline of the industry] coming a long time ago.â€

Tucked away in the mountains from which it takes its name, Appalachia is just a 30-minute drive from the Kentucky state line. It was one of many settlements that sprang up around mines. Those clusters became known as “coal camps,†where housing and services were all operated by the coal companies in the arrangement made famous in Tennessee Ernie Ford’s classic 1955 hit.

Coal towns that flourished became full-fledged municipalities, like Appalachia, which was founded in 1898. As mining became safer and wages rose, Appalachia and surrounding towns became symbols of success of small town America, a rural answer to Detroit. Hospitals, schools, restaurants and shops sprang up, all fed by the trickle down from “King Coal.â€

There is no end in sight for the current decline, according to a report by Downstream Strategies titled, "The Decline of Central Appalachian Coal and the Need for Economic Diversification."

“Coal production in Central Appalachia is on the decline, and this decline will likely continue in the coming decades,†states the 2010 report, which predicts production, which peaked at 290 million tons in 1997, will amount to less than 100 tons in 2035.

Many have moved away from Appalachia in search of work in recent years. Other breadwinners, reluctant to shatter the family bonds built over decades, spend their weekdays in far-off locations, sending money home and visiting on weekends or whenever they can. In Appalachia, they call it the “Suitcase Brotherhood.â€

Related Image

This 1974 photo from the National Archives shows Appalachia's largest coal mine, complete with three silos to store coal until it was ready to ship.

James Hibbitts was an upper middle-class banker in Appalachia back when there were loans to be made. Now, he works throughout the week for a natural gas company in Pennsylvania, some 375 miles away, returning for a few days when he can in order to be with his family.

“I am torn between the place I call home and the travel I am having to do to provide for my family, he said.

Environmental and liberal groups say there is no “war on coal,†only policies aimed at reducing pollution. They say many factors have contributed to the downturn in places like Appalachia, and the key to their turnaround is adaptation.

"The Appalachian coal market is confronting a perfect storm of mature coal resources, abundant and low-cost natural gas, deflated global coal prices, an influx of coal from Colombia and other countries, and competition with coal from other parts of the United States," said Alison Cassady, director of domestic energy policy for the Center for American Progress. "It does not help to blame the EPA and ignore the more fundamental market forces at work."

Rick Mullins, a local business owner in Appalachia and former state Senate candidate, agrees to some extent. He said the area has many attributes that could aid in a turnaround, but says federal aid is needed.

“What we are going to have to look to in the future is diversification,†Mullins said. “Owing to the unique history and natural beauty of the region, other avenues of employment could involve promotion of tourism in the region.

“If we could attain some kind of federal assistance in order to level the playing field, it would help greatly,†Mullins added.

Whited is not sure the Appalachia he grew up in will ever come back.

“I've got some good memories when things were better,†he said. “A lot of people had money and times were much more prosperous than they are now. Now there's really none of that, and it's empty for the most part.

“It's sad."

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The current administrating in D.C. has basically stated that one of its goals is to end the coal industry.  When I had my new well dug, it had to be fracked to get through the rock to the water.  Done correctly, fracking can be a benefit.  The Dakotas are certainly benefitting from those efforts.

There is a difference between fracking for a well here and there, and fracking large tracts of land for gas. 

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I do not want to engage in a long, drawn out battle of whether fracking is good or not.  I happen to believe that the fracking industry is safe, effective and can be an incredibly useful tool.  Others may believe differently.  There is not enough data and history to really determine the long term issue that may arise from this process so I'll keep an open mind.  But I will say it again, look at what is happening in the Dakotas.  It is hard to argue with the success going on there.

 

I also find it somewhat interesting and almost comical that we (mankind) have such a high opinion of ourselves.  The Earth has been here a LONG time and will probably be here a LONG time after we as a species are gone.  In reality, we change the composition of a few things here and there but we PROBABLY have a negligible effect on the planet as a whole.  Other than a little space junk we send into orbit and the few comets that hit us every so often, there is really nothing here that hasn't always been here.  Dust to dust and all that...

 

I recall reading somewhere that a volcano eruption polluted the planet more in a day or two than humans did in YEARS.  At any given time, 1/3 of the Earth is in drought; 1/3 is about average; and 1/3 is above average.  The Earth warms and cools; I seriously doubt that we have any real effect on that cycle.  So, I think if we can find something that helps the people as a whole,  why not use it?  We have regulations out the yazoo to ensure it is safe.  Otherwise, the UVAOs of the world would be out of business!

 

In our business, we move a lot of dirt.  Mother Earth has this uncanny ability to fix things she does not like!  But plastic bottles seem to have a way of avoiding her immediate wrath! 

 

I am officially off the soap box and going back to work.  No offense UVAO...

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My only concern with fracking is that adequate safeguards are put in place to avoid environmental damage.  Extraction of many resources can have a long term detrimental affect, and we all know that most companies are going to minimze their cost in order to maximize ROE.

 

Let's face it, these guys don't have a great track record of doing that on their own.

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I am more concerned with China and their "don't give a damn attitude" and third world countries burning rain forests than I am about an American Gas company fracking. 

 

Now that's what I'm talking about Bob! You sound like the kind of guy I could sit down and talk to. Maybe me and you agree on more than I first thought....lol

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God put these resources in the ground for a good reason and we should be able to access them. I do agree with Tiger that we do need some oversight and regulation but it needs to be a group made up of experts that have worked in those fields hands on and from the areas. Then we might have good common sense oversight and regulations. People that actually care about both sides!

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